It has been a wild ride for Warner Bros. and its flagship pay-TV property HBO over the past few years.
It took years of negotiations between AT&T (T), Time Warner, and the Department of Justice to get the go ahead for AT&T to close its $85 billion purchase Time Warner in 2018.
AT&T fought the DOJ hard over the deal as the government felt that the company would charge its cable competitors more for Warner Media content following the merger.
Then just three years after the deal closed, the company announced that it was spinning off the media assets it just acquired to combine with Discovery Media, in a $43 billion deal meant to create an even larger content giant.
That new combined entity isn't expected to debut in full until 2023, but the executives at Warner Brothers Discovery (WBD) are already preparing the way for the future by making some big changes on the Warner side, specifically with HBO MAX.
"We've been able to dig deeper into the financials and have gained a much better, more complete picture of where we are and the path forward, including identifying some additional and unexpected challenges that have and will continue to require our focus and attention," new CEO David Zaslav said during the August earnings call, his second with the company.
The changes have ruffled the feathers of some fans of the content on the platform, but Warner isn't planning on slowing down.
Changes Coming to HBO MAX
Back in its heyday, HBO was the crown jewel of prestige television.
The subscription network dominated television's Emmy Awards with shows like The Sopranos and The Wire. Not much has changed, as the company as HBO and HBO MAX received 140 nominations, 10 more than it garnered the previous year, at the 2022 Emmy's
But when Warner Bros Discovery is done with the channel, it will look like a very different entity.
The quality of content, if you want to measure that quality by Emmy nominations, can't be the reason for the changes, so the heart of the issue from Warner Discovery's perspective must be money.
"Our focus is on shaping a real business with significant global ambition, but not one that solely chases subscribers at any cost or blindly seeks to win the content spending wars," he said.
Zaslav also says there is room for "improvement and cost savings" at the network as the company looks to get lean ahead of the launch of the new streaming service that will feature both Warner Media and Discover content.
While the company has been open about its plan to find $3 billion in cost synergies from the merger, Zaslav indicated that the company is just a third of the way through its cost-cutting strategy.
"We have implemented initiatives leading to $1 billion in run rate synergy over the next 12 months, with at least an additional $2 billion in the works as part of our cost synergy plan," Zaslav said.
The biggest title to be knocked off of WB's schedule so far is the well-publicized direct-to-streaming movie "Batgirl," which reportedly had a budget of $90 million.
The company also canceled "Full Frontal With Samantha Bee" after the show received its 19th Emmy nomination. "Full Frontal" joined other casualties like "Made for Love" and "Raised By Wolves" in receiving the corporate axe in recent months.
But the company seems to be just getting started since, as its CEO stated, it still has another $2 billion in cuts to make.
Here's What Is Next for HBO Max
Zaslav also announced plans to introduce a less expensive, or even a free, advertising-supported tier for the service, and to begin moving the various reality shows under the Discovery umbrella into the HBO Max streaming service.
Select offerings from the Magnolia Network will be available on HBO Max, starting in September, including “Fixer Upper: The Castle.” This will be the first time Discovery-produced shows will be available on HBO Max.
TV series and specials that were created for CNN, including the beloved series “Stanley Tucci: Searching for Italy” and “Anthony Bourdain: Parts Unknown,” will get its own hub on Discovery+. The series were previously available on HBO Max until they were moved to the short-lived CNN+ streaming service.
There’s also been rumors that HBO Max might get a new name that more prominently features the title “Discovery."
